You are currently browsing the monthly archive for January 2014.

Unemployment – It’s How You Measure It!

By Shlomo  Maital

            unemployed  unemployed 2

       Writing in the Los Angeles Times, my friend Clyde Prestowitz, formerly senior trade policy advisor to President Reagan, explains the mystery of unemployment rates – if the U.S. job market is so bad, why is the unemployment rate so low? (6.7 per cent)? 

    Here is the answer, according to Clyde:

      “ Although the Federal Reserve Bank says we’re in the midst of a recovery, and the official unemployment rate has fallen below 7%, the economy is far from being out of the woods. That official rate – technically known as U-3 – doesn’t begin to tell the real story.  It is only one of six unemployment measures kept by the U.S. government and counts all those who say they are unemployed and looking for work.   

      But it does not include those discouraged unemployed workers who have given up looking for a job or those who would like to work full time but are only able to find part-time work. The rate that includes all those people – U-6 – is about 13%.    Granted, that is below the 17% of 2010, but it is still far above the 8% of 2007, as we navigate what is being called a recovery – albeit an abnormally slow one.”

         Americans who have a job, the fortunate ones, but fear they could lose it, and those who lack a job,  and are seeking one or who have given up [discouraged workers], should be defined as “unemployed or at risk of unemployment”.  THAT rate is over 50 per cent. And that is the relevant measure, and it is not included in U1 through U6. 

     U.S. President Barack Obama has just given his State of the Union address.  He mentioned the job problem, but gave no specifics.  This should become his top priority.  It’s a tough nut to crack.  Companies like Facebook, with a stock market cap of some $160 b., generate relatively little employment.  Companies like Apple create jobs in China.   Small businesses face impossible competition from shopping centers and chain stories like Wal-Mart.  So, President Obama, start with the SME’s, small and medium-size enterprises.  Help them a bit.  Nothing could help create jobs more.  And silence the big lobbyists, who drown out the weak voices of those SME’s.    

Advertisements

Goodbye, Pete! Thanks for Everything!

By Shlomo  Maital  

        Seeger

 The beloved American folksinger Pete Singer died on Jan. 27. He was 94.

 Seeger sang, wrote songs, protested and performed for over 70 years.  I remember hearing him in concert, in Ottawa, 50 years ago.  He sang “The Bells of Rhymney”, accompanied himself on the 12-string guitar.  That guitar, hard to play, sounded like an entire orchestra, and amazingly, like the Bells of Rhymney.

   Seeger once belonged to the Communist Party. That won him a blacklist in the U.S., during the McCarthy era, and kept him off TV. But in the end that was a benefit.  He toured college campuses widely, and became an icon.

    He and Joan Baez made the song “We Shall Overcome” the anthem of the civil rights protest movement in the 1960’s.   Amazing what a difference one word makes. The initial lyrics were, “we will overcome”.  Seeger changed it to “we SHALL overcome”.  Why?  “Shall” is assertive, definitive, emphatic.  We SHALL do it. 

   As a member of The Weavers, Seeger recorded “Good night, Irene”, which made it to the top of the charts in the 1950s.

    Seeger wrote great songs, like “If I had a hammer”,  “Where have all the flowers gone,”  and my favorite, “Turn, turn, turn” – the song they played when I first met my future wife,  at Princeton Hillel. 

    Bye, Pete. We’ll miss you. We’re glad you sang and performed to the end, and that you had only a brief illness.   Basically, you died with your boots on,  singing and performing, playing that wonderful banjo, sometimes the 12-string.  You taught us that there are many ways to protest, and singing is one of the most powerful.   

Wawrinka and Samuel Beckett: On Failure

By Shlomo  Maital  

Beckett       Wawrinka

                                                               Samuel Beckett                                                             Stan Wawrinka

 

  There is  a very interesting connnection  between Swiss tennis star Stan Wawrinka, #3 in the world and winner of the Australian Open, and author and playwright Samuel Beckett, Irish-French, author of Waiting for Godot.     

   Wawrinka just won the Australian Open Grand Slam, unexpectedly defeating Rafael Nadal,  to whom he had repeatedly (at least 12 times in Grand Slam events) lost in the past.  His win was decisive, in four sets, and Wawrinka at times (according to the New York Times) bullied Nadal, something that Nadal usually does himself with fierce ground strokes and serves. 

    Wawrinka himself found it hard to believe; and it is rare that a number 8 ranked player wins over the Big Four (Murray, Federer, Djokovic, Nadal). 

    What is his secret?   According to Greg Bishop (Global New York Times, Jan. 28),  last March Wawrinka had the following words, written by Beckett, tattooed on his left forearm: “Ever tried. Ever failed. No matter. Try again. Fail again. Fail better!”  (from his play Westward Ho!, 1983).

   Before Sunday’s Australian Open final,  the Big Four players had won 34 of the 35 major titles.  That means, if you’re not one of the big four, you have a one in 35 chance to win, or less than three per cent.  But, if you try to fail better (that means, try your absolute best, facing huge odds, battle with everything you have, leave it all on the court, and walk off with dignity and pride even if you lose),  one day you will win.  Or, you will “fail to fail”, as Bishop puts it nicely, which means you will succeed. 

   Wawrinka offers us a big lesson in life.  And it was fun to see how he himself could hardly believe he had won. 

Mary Barra at GM: First Sure Steps

“Don’t Confuse Progress with Winning”

By Shlomo  Maital      

     Barra

    I’m following new GM CEO Mary T. Barra closely, after she took over the company on Jan. 15 from Daniel Akerson.  Akerson was appointed by the U.S. Government, which bailed out GM, and saved it from bankruptcy, then sold its GM shares at a profit.  Akerson spent his four years as CEO “cajoling the company to shed its hidebound culture”, according to  Bill Vlasic, New York Times (Jan. 25-26, p. 11).  But Mary Barra has a different message. Speaking to top GM executives at a two-day meeting, her message struck just the right tone. 

   “There is no destination here, this is a continuous improvement journey.  Don’t confuse progress with winning.”

    Barra is a trained engineer and brings shop floor experience to the CEO job.  And she ‘get’s it!’.  The car business is all about building beautiful, sexy, powerful, appealing, attractive, safe, cost-effective fuel-efficient cars and trucks.  It’s not a sport. 

  “Even when you’re leading in a segment, that’s only for the moment,” she cautions.  “You have to continually keep raising the bar for yourself.”

   That’s a powerful message for GM.  It is doing well in the U.S. and China.  U.S. sales rose 7.3 per cent last year, but the car industry itself overall grew by 7.6 per cent.   GM has an 18 per cent market share in the U.S. and has struggled to maintain it.  It lost the global lead to Toyota, which sold 10 m. vehicles last year, more than any other company. 

    Barra is far far less standoffish than her predecessors.  She travels the world, holds small ‘town meetings’ with GM employees, and she is a good listener.  She is also tough.  “If you have a problem you better solve it. Because if you don’t, you won’t be here or the company won’t be here,”  she says.  She has set two ambitious goals for GM – 10 per cent net pre-tax profit margin in North America and breakeven in GM’s losing European operations,  both by 2015. 

     My parents once bought a beautiful coral Oldsmobile with a white vinyl hardtop. It was a beautiful car that not only a mother could love.  GM lost its way when it was led by a series of beancounters who cared nothing about cars.  Can it reinvent itself, and its culture, under Barra?   Could be.  It’s fun to watch her in action.   The future may indeed belong to women managers… see how Marissa Mayer has turned around Yahoo’s fortunes!  And Janet Yellen, who will decide the fate of the dollar, and the U.S. economy.  

Bolsa Familia: Welfare Payments That Work

By Shlomo  Maital   

           Bolsa Familiar 1

                        Bolsa Familiar graph                         

  As the super-rich and powerful of the world gather at Davos, Switzerland, the amount of hypocrisy spoken there about battling poverty could sink a mid-sized country.  The super-rich wring their hands…and the next moment, use both of them to grasp more and more assets. 

   Right under our noses is one possible solution.  Theory doesn’t help.  We need to see what works.  Check out Brazil.   “Bolsa Família (formerly Bolsa Escola) started in the 1990s and expanded rapidly in 2001 and 2002. It provides monthly cash payments to poor households if their school-aged children (between the ages of 6 and 15) are enrolled in school, and if their younger children (under age 6) have received vaccinations.”  In other words – attach the welfare conditionally to actions that will help get the NEXT generation out of poverty, through good health and good education and schooling.

   The result?   Look at the graph above.  Since Bolsa Famliar was introduced rural poverty declined steeply, and urban poverty declined impressively,  where poverty is measured as living on under $1.25 daily.    There is still severe poverty in Brazil – but Bolsa Familiar is helping to battle it. 

  The basic idea is so simple.  To survive, poor families have to send kids out to work sometime.   Offer them help – but condition it on sending the kids to school.  Now, if the super-rich at Davos could take a moment from the ski slopes and fancy restaurants, perhaps they might consider investing some of the trillions they have in a large-scale pilot project, for very poor countries, along the lines of Bolsa Familia.  That might diminish slightly the cynical hypocritical atmosphere that is so evident. 

   

Root for the Jamaican Bobsled Team at Sochi

(Remember ‘Cool Running’?)

By Shlomo  Maital   

 

Jamaican bobsled team 2002

   Remember the legendary Jamaican Olympic bobsled team, in the 1993 movie Cool Running?  Well, they’re back, big time!    

    Thanks to an outpouring of support for its online crowdfunding campaign, the Jamaican bobsled team is heading to Sochi with over $120,000 — and a dream 12 years in the making.   On Monday, the members of the underdog team from the island nation learned they had qualified for the two-man bobsled competition for their first appearance in the Winter Olympics since 2002. That elation has been followed by overwhelming gratitude from the team toward its fans, after a crowdfunding campaign exceeded their target goal of $100,000 in a matter of days.

  Team member Winston Watts said,  “the team has stopped accepting funds as of Tuesday after hitting its financial target.”   A campaign on the crowd-funding site Crowdtilt.com, combined with another campaign involving the virtual currency Dogecoin, has raised more than $125,000. Another campaign on the site Indiegogo has raised more than $43,000.

   This is Watts’ fourth Olympics!  He competed in 1994, 1998 and 2002.   He and his team are an inspiration for Israel’s ice hockey team. 

   Today, thanks to crowdfunding, if you have an inspiring idea and can communicate it well, you can fund projects that otherwise would die.  Zach Braff directed the hit cult movie “Garden State” a decade ago.  He managed to crowdfund his new movie “Wish I Was Here” on Kickstarter last April, raising $2 million in 48 hours and $3 m. overall, from over 40,000 people!   It made it possible for him to make his new movie without the dictates of investors.  

      Jamaica’s bobsled team may finish last.  But Watts and the team embody the Olympic spirit, which is that competing is the goal, not just winning gold.   Go Jamaica!  Run cool. 

  Is Dissent A Necessary Condition for Innovation?

The Case of China

By Shlomo  Maital  

dissent

In this blog, I prefer to raise a question, rather than provide an opinionated answer

  The question is:  Can China become an innovation leader,  without permitting open dissent and democratic debate? 

 In today’s New York Times,  Stephen Sass, a Cornell materials scientist, argues, the answer is no.  “I don’t believe China will lead in innovation anytime soon – or at least not until it moves its institutional culture away from suppression of dissent and toward freedom of expression and encouragement of critical thought.”  He notes that almost all the paradigm-shifting innovations in the past few hundred years emerged “in countries with relatively high levels of political and intellectual liberty.”  The reason?  Free countries encourage people to be skeptical and curious. National innovation is the result of creative individuals who have the freedom to broach new ideas.  And finally, free societies attract creative talent, oppressed societies push them out. 

    Here is a series of ‘yes’ arguments.   China will innovate, by innovating its own approach to innovation.  For instance, China excels at “design for value”, innovations in product design that create excellence in ‘manufacturability’.  Chinese innovation will be far more team-based, rather than garage-based American Wild West individualism.  China’s culture fosters discipline, and focused discipline is a key aspect of innovation. China’s huge growing internal market will make entrepreneurship much easier, as startups can sell at home rather than sell abroad, as in Israel.  China has massive savings, which make availability of capital for startups much easier than in the West.  China’s educational system generates enormous numbers of engineers; even if only 1 per cent of them are creative, that is sufficient to fuel a wave of innovation. 

     Can China become truly innovative?  Don’t hold your breath for China to become democratic and tolerate widespread dissonance. The Chinese leadership believes this would blow the lid of China’s economy.  Given the ‘in the box’ thinking of innovation without dissent —  China will struggle to find its way.  Time will tell if they succeed.      

 

  Why Money Should Be Like Manure – But It Isn’t!

By Shlomo  Maital   

                  manure pile 

   Money, it is said, is like manure.  To do any good, it has to be spread around widely.

   But in today’s screwed-up post-global-crisis world,  it isn’t.  Money is increasingly concentrated in a very few hands.  And as a result it just sits there.   This is the nub of the problem.

   Consider these two pieces of data.

   *  A new study by Oxfam, the British philanthropic NGO, claims that  85 super-super-rich individuals in the world hold wealth worth $1.65 trillion!   This amount of wealth, held by fewer than 100 individuals, is equal to the value of all the wealth held by the poorest half of the whole world – 3.5 billion people.   The average wealth of the super-super-rich 85 is $19 b. per person. 

     Try this imaginary exercise.  Suppose, tomorrow, these 85 super-super-rich followed Warren Buffett and Bill Gates and gave away their wealth (gradually selling assets, in order not to depress the prices of stocks, bonds and real estate) and handed the proceeds to the world’s 3.5 billion poor people.  Each poor person would get $471.   This is a paltry sum. But it would change the lives of the poor.  They could start businesses, buy small pieces of land, buy a home.  And this spending would generate income for other poor people, who in turn would spend it…and end the global economic stagnation. 

     Imagine, as John Lennon says.. Imagine.  But it’s just a pipe-dream.  The wealth of the super-super-rich is the opposite of manure.  It sits in their safes and living rooms,  instead of spreading around the world.

   *  According to the Financial Times, Jan. 22,  “the pile of unspent corporate cash that has built up since the start of the financial crisis is being held by an increasingly concentrated pool of companies that will be crucial to hopes of a pick-up in business investment to stimulate the world economy.”   A study by the consulting firm Deloitte shows that globally,  “about a third of the world’s biggest non-financial companies are sitting on most of a $2.8tn gross cash pile of unspent corporate cash (retained earnings) !  And of that sum, fully 5 per cent is accounted for by Apple alone, with $150 b. in unspent cash! ”   “Looking ahead, the wave of cash [spending] that many are expecting will depend on the decisions of a few, rather than the many,” a Deloitte expert said.

  Why aren’t corporations spreading around their cash, like manure?  In a risk-averse world, with sluggish economies, there is no need to invest in more productive capacity.  Better to hold on to the money and play with it than invest it in real industry, in real job-creation, in real innovation.  This is what the handful of rich corporations believes.

    Why not impose a tax on unspent retained earnings, to create an incentive to invest it?  Why reward Apple for holding its cash abroad, instead of investing it in America? 

     So there you have it.   Billionaires and rich corporations. Both sit on huge piles of money.  And the money just sits there.  Until it starts to move, we won’t see true global economic recovery or more new jobs for those who really need them.  

 What We Learn from Claudio Abbado

By Shlomo  Maital  

         Abbado                  

Claudio Abbado

   The great Italian conductor Claudio Abbado died on Monday, age 80.  He passed away at his home in Bologna, Italy.  He had been ill for years.

    We can learn a great deal from this fine man.  Star orchestra conductors often have egos the size of Texas and personalities that combine General Patton and Genghis Khan.  Not Abbado. 

     Abbado used to say,  “Many bad things in the world could be avoided if only people would listen to each other.”  He told this to his musicians:  Listen to each other.  Play as you like, he told them,  clashing violently with the Herbert von Karajan ‘my-way-or-highway’ approach; don’t just wait for me. 

    This combination of respect, empowerment, respect for his musicians, and teaching them respect for one another,  led to crisp, brilliant, lyrical performances.  He broke the rule that great orchestras, like the Berlin Philharmonic, are utterly disciplined, like elite army units.  He got the best out of his orchestras, like La Scala, by getting his musicians to like and respect him, and motivating them to work hard to make extraordinarily beautiful music.    This is true leadership.

     Abbado was an innovator. He encouraged avant garde music.  He performed Manzoni’s “Atomtod”, at the Salzburg Festival – entirely in the dark!

      He once explained his awkwardness in taking curtain calls, citing a conductor, Knappertsbusch, who refused curtain calls entirely.   Abbado said,  “it still embarrasses me to take bows. I’m not a showman.”   In an age when famed conductors are primarily showmen,  Abbado was rare.  He broke the rules. We can learn much from his leadership style.

    

 Singapore Redefines Literacy

By Shlomo  Maital

         literacy

   “Kids who read – succeed!”   Of course.  But somehow, technology keeps raising the bar.  It used to be that literacy meant the ability to read and write.  A sad proportion of the world’s kids still can’t read or write.  Today, literacy means, or should mean, computer literacy.  And as usual, Singapore leads the way.

     Singapore has announced plans to start software-programming classes in public schools, so that more students will learn how to write computer programs, according to the website Tech in Asia.

    Singapore’s Infocomm Development Authority (how many nations even HAVE an infocomm Development Authority???) will introduce computer-coding classes in the schools in the next few months.  The courses could be part of the curriculum, or perhaps an extra-curricular activity.

   Singapore sees developing programming literacy as a “strategic catalyst for Singapore’s competitive advantage”.

    My guess is, programming will become part of the official curriculum. It should be – and it should in other nations as well.  Literacy is no longer the ability to write words.  It is the ability to write computer code.  Let’s imitate Singapore, which as usual has blazed the educational trail for the rest of us.   

Blog entries written by Prof. Shlomo Maital

Shlomo Maital
January 2014
M T W T F S S
« Dec   Feb »
 12345
6789101112
13141516171819
20212223242526
2728293031  

Pages